In a few word
ABC analysis is a method of inventory classification derived from Pareto’s law. It is used in many cases, it can be in relation to products to be sold, items used in the workshop, consumables, and more. The three categories are A, B, and C.
Class A items represent the best-sellers—about 80% of the costs for a component, or sales for a product. Class B represents the next 15%, with items that are used less frequently. These can be items in decline that will join the C class, or developments that will soon join the A class. Finally, class C items are used most rarely, representing 5% of costs or revenues.
This will allow you to apply different stock policies depending on the product category.
